WTI oil surges to 15-month high as U.S. crude inventories plunge

Fed Minutes

The minutes from the Federal Open Market Committee’s June 18-19 meeting show officials want to see that employment is improving before reducing the pace of $85 billion in monthly bond purchases.

“Many members indicated that further improvement in the outlook for the labor market would be required before it would be appropriate to slow the pace of asset purchases,” according to the record of the Fed gathering released today in Washington.

The dollar fell against the euro after the release of the minutes, bolstering the appeal of commodities denominated in the U.S. currency as an investment. The dollar slipped as much as 1.3% against the common currency. The Standard & Poor’s GSCI Index of 24 raw materials reached 644.62, the highest level since April 3, led by gains in gasoline and WTI.

Technical Indicator

The U.S. benchmark oil extended its rally after breaching a technical resistance level on the weekly chart, according to data compiled by Bloomberg. Futures settled above $103.39 a barrel, the 61.8% Fibonacci retracement of the decline to $32.40 in December 2008 from an intraday record high of $147.27 in July that year. Investors typically buy contracts when prices exceed technical resistance.

Implied volatility for at-the-money WTI options expiring in September was 23.5%, up from 22% yesterday, data compiled by Bloomberg showed.

Electronic trading volume on the Nymex was 1.11 million contracts as of 3:44 p.m. It totaled 794,959 contracts yesterday, 22% above the three-month average. Open interest was 1.82 million contracts.


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